Healthcare
I covered science and medicine, and believe this is biology's century.

Alnylam chief executive John Maraganore is taking a proactive stance on drug pricing.

Alnylam

This morning, after 16 years and $2.5 billion in investment, the Cambridge, Massachusetts-based company Alnylam finally turned a 1998 biology breakthrough into a medicine: a drug called Onpattro to treat the destruction of nerves that results from a rare disease, hATTR amyloidosis, thought to afflict about 50,000 people worldwide.

“It’s a great day for patients, it’s a great day for science, and, frankly it's a great day for perseverance,” says John Maraganore, Alnylam’s longtime chief executive.

The price of the new medicine, though, may give people who haven’t paid attention to the cost of treatments for rare diseases pause. Onpattro will have an list price of $450,000 per patient per year for the average patient. (The drug is dosed based on weight.) This is in line with other drugs that treat rare disorders and the expectations of financial analysts. In order to make sure patients can get it, Alnylam is taking steps that are new for a rare-disease company, including a money-back guarantee for insurers.

Many of the patients who receive the drug will be in hospitals that qualify for discounts due to a government program called 340B, which allows hospitals to pocket part of the price of a drug. The net price after these discounts will be $345,000, 23% less than the drug’s list price. Alnylam expects to continue to be unprofitable as it develops other drugs based on its gene-silencing technology.

Maraganore says that the drug’s efficacy—according to a scale that measures symptoms, patients with hereditary transthyretin-mediated amyloidosis, or HTTR actually improved a bit on Onpattro while those on placebo got much worse—and the rarity of the disease—he estimates that there are only 3,000 patients diagnosed with HTTR eligible for Onpattro in the U.S.—explain the high price. Another 10,000 patients may not yet be diagnosed.

Then there is the money-back guarantee, what Alnylam and other drugmakers refer to as value-based pricing. Alnylam is seeking to enter agreements with insurance companies so that if a patient does not gain sufficient benefit from Onpattro, the entire cost of the drug will be given to the insurer as a rebate. An exception: if the amount of rebates being given on the drug become enough to lower the medicine’s average selling price, which is used to set prices in the 340B program.

In a press release issued by Alnylam, executives at the insurer Harvard Pilgrim and the pharmacy benefit manager Express Scripts were enthusiastic about the proposed arrangement. “By virtue of linking level of reimbursement to meaningful patient outcomes, this agreement will help us meet the needs of hATTR amyloidosis patients by supporting our efforts to balance access and affordability,” said Michael Sherman, chief medical officer of Harvard Pilgrim Health Care. Added said Steve Miller, chief medical officer at Express Scripts: “We applaud Alnylam for taking a responsible approach to pricing and patient access in the rare disease space, an increasingly complicated challenge.”

Maraganore also reaffirmed his commitment to the pricing principles he announced last year at the Forbes Healthcare Summit, which include pegging his drug-price increases to inflation unless new data shows there are dramatic, unexpected benefits for his drug. “This is the price we’re going to stick with until, essentially, eternity,” he says.

Alnylam’s experience is increasingly common for biotechnology companies that have done something amazing and innovative: The excitement of a breakthrough quickly gives way to the difficulty of determining what to charge for it. The technology Alnylam is built on is a type of chemical called RNAi, a form of the RNA that is used as a genetic messenger inside every living thing. Normally, DNA is used to make RNA, which the body then uses to create its protein building blocks. RNAi blocks this process, essentially turning off a gene. There are other drugs that are made of RNA, but none are made from this natural process.

The 1998 discovery of RNAi garnered its discoverers a Nobel Prize. But after an initial burst of excitement, most companies abandoned the prospect of turning this science into a drug. Alnylam continued. Its investors may have mixed feelings about today’s approval. Some may have expected that the U.S. Food & Drug Administration would allow Alnylam to market the drug for potential heart benefits for HTTR patients; it didn't. Some are also worrying about a Pfizer drug that may prove to be much less expensive if it is approved. Launching new drugs is tough, and sales often underperform expectations.

Today, though, Maraganore is focusing on what his company has accomplished. We couldn’t be more excited,” he says. “It’s a huge day for Alnylam, 16 years in the making and 20 years from the discovery of RNAi.”